Goldman Sachs Group CEO David Solomon said that he currently does not expect the Federal Reserve to cut interest rates this year because the economy has shown greater resilience thanks to government spending.
David Solomon
“I still haven't seen convincing data indicating we will cut interest rates,” he said at a Boston College event, adding that he currently predicts “zero” interest rate cuts. Investments in artificial intelligence infrastructure are also driving the economy to be more resilient in the face of the Federal Reserve's monetary tightening.
However, Solomon said that consumers have begun to feel the pressure brought about by rising prices. He pointed out that recent performance reports from McDonald's and other companies prove that consumers have begun to curb spending.
“If you talk to CEOs of companies that actually deal with the 'middle' of the US economy, you'll find that these companies are already beginning to see changes in consumer behavior,” he said. “Inflation is not just nominal; it's cumulative, so everything is more expensive. You're starting to see consumers, ordinary Americans, feel this way.”
Solomon also said there is a greater risk that the economy will slow down “realistically” to some extent compared to six months ago. He mentioned the fragility of geopolitics and said people will have to endure this for a long time.